Senior Economist at UOB Group Julia Goh and Economist Loke Siew Ting comments on the latest release of inflation figures in the Philippines.
Key Takeaways
The Philippines’ headline inflation eased for a fourth straight month to 6.1% y/y in May (from +6.6% in Apr), marking the lowest level since Jun 2022. The reading matched Bloomberg consensus but came in a tad lower than our estimate of 6.2%. The easing pace was largely credited to lower prices of food & nonalcoholic beverages, transport, electricity, tobacco, as well as food & beverages serving services amid the ebbing of year-ago high base effects.
Given that the Philippines’ headline inflation has decelerated at a faster pace than we had anticipated over the past four months (Feb-May), we tweak our full-year inflation projections lower to 5.3% for 2023 (from 6.0% previously, BSP est: 5.5%, 2022: 5.8%) and 2.5% for 2024 (from 3.5% previously, BSP est: 2.8%). Nevertheless, we keep our view that inflation will return to the central bank’s 2.0%-4.0% target range only in 4Q23, and our revised outlook does not factor in any potential changes in domestic policy (i.e. public transport fare hikes and wage adjustments) as well as adverse impact of weather and external forces.
The latest month of inflation outturn and anchored inflation expectations continue to strengthen the case that the BSP may have been done with its rate hikes. Real interest rates have turned positive for the first time since Sep 2020 last month while core inflation eased for a second month albeit at a moderate pace, further reflecting the lagged effects of past rate hikes. Hence, we reiterate our year-end BSP rate projection to be unchanged at the current 6.25%, implying no more adjustments for the rest of the year with forward US rate trajectory being the key swing factor.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD finds support above 1.0450, holds at 10-month lows

EUR/USD dropped to a fresh low for the year, reaching a level close to 1.0450 on Tuesday. It then experienced a slight rebound, but recovery momentum faded around 1.0480. The US Dollar continues to be supported by positive US economic data, higher yields, and a risk-averse market sentiment.
GBP/USD moving sideways around 1.2070

GBP/USD reached a bottom at 1.2053 on Tuesday, marking the lowest level since March. However, it later trimmed its losses and rebounded to 1.2100. Nevertheless, the pair pulled back once again following positive US data. It is stabilizing around 1.2070.
Gold moves closer to $1,800 amid risk-off flows Premium

Gold price stays under modest bearish pressure and trades below $1,830 in the second half of the day on Tuesday. The benchmark 10-year US Treasury bond yield holds at fresh multi-year highs above 4.7% after upbeat US data, not allowing XAU/USD to gain traction.
Bitcoin Lightning Network capacity falling to a 14-month low should not worry BTC investors

Before Bitcoin Ordinals and BRC-20, the world’s first cryptocurrency network ran the most prominent Layer-2 solution – Lightning Network (LN). Over the past, the network was widely utilized for conducting faster transactions, but LN seems to be losing the amount of BTC on it at the moment.
S&P 500 Forecast: Index slides over 1% as risk-off mood persists

The S&P 500 index lost 0.74% last week, which was the fourth week in a row where the index declined. That performance came despite Personal Consumption Expenditures (PCE) data showing that Core inflation was growing at its slowest pace in two years.